UNITED STATES SECURITIES AND EXCHANGE
COMMISSION Washington, D.C. 20549  FORM
10-Q   [X] QUARTERLY REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the quarterly period ended
September 30, 2008  [
 ] TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition period from ___ to
___  Commission File No. 000-30951  SILVERGRAPH INTERNATIONAL, INC.
(Exact name of registrant as
specified in its charter)NEVADA
(State or other jurisdiction of
incorporation or organization)
67-0695367
(I.R.S. Employer Identification
No.)11919  Burke Street, Santa Fe
Springs, CA
(Address of principal executive
offices)
90670-2507
(Zip Code)(562) 693-3737
(Registrants telephone number,
including area code)  The registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
                Yes
 [X]   No [  ]  Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company:  Large
accelerated filer [  ] Accelerated filer [   ] Non-accelerated
filer [   ] Smaller reporting company[X]  Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act). Yes [
  ]   No [X]  The number of shares outstanding of the registrants
common stock as of November 14, 2008 was 61,450,976.


TABLE OF
CONTENTS  PART I  FINANCIAL INFORMATION  Item 1.  Financial
Statements 3 Condensed
Consolidated Balance Sheets as of September 30, 2008 4 Condensed
Consolidated Statements of Operations for Three and Nine Months Ended September
30, 2008 and 2007 5 Condensed
Consolidated Statements of Stockholders Deficit as of September 30, 2008 6 Condensed
Consolidated Statements of Cash Flows for Nine Months Ended September 30, 2008
and 2007 7 Notes to the
Condensed Consolidated Financial Statements 8 Item 2.  Managements
Discussion and Analysis of Financial Condition and Results of Operations 24 Item 3.  Quantitative and
Qualitative Disclosures About Market Risk 31 Item 4T.  Controls and
Procedures 32  PART II  OTHER INFORMATION  Item 1. Legal Proceedings 33 Item 1A.  Risk Factors 33 Item 2.  Unregistered
Sales of Equity Securities and Use of Proceeds 39 Item 3.  Defaults Upon
Senior Securities 39 Item 4.  Submission of
Matters to a Vote of Security Holders 39 Item 5. Other Information 39 Item 6.  Exhibits 39 Signatures 41   2      PART
I  FINANCIAL INFORMATION  ITEM 1.
 FINANCIAL STATEMENTS  The
financial information set forth below with respect to our balance sheet as of
September 30, 2008 and our statements of operations for the three and nine month
periods ended September 30, 2008 and 2007 is unaudited.  This financial
information, in the opinion of management, includes all adjustments consisting
of normal recurring entries necessary for the fair presentation of such data.
 The results of operations for the three and nine month periods ended
September 30, 2008, are not necessarily indicative of results to be expected for
any subsequent period.  3    SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS  September 30,
2008

December 31,
2007ASSETS

(unaudited)Current assets:Cash and cash equivalents
$
30,600
$
17,737Accounts receivable, net of allowance for doubtful
accounts.adjustments and sales returns of
$0

-

21,092Other assets

3,000

-Total current assets


33,600

38,829Property and equipment, net of accumulated
depreciationof $662,560 and $577,843

10,106

149,846Total assets
$
43,706

188,675LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Accounts payable
$
191,279
$
214,788Accrued expenses

41,923

184,633Line of credit

42,363

43,593Capital lease obligation, current

-

21,362Convertible promissory notes

190,000

-Due to shareholder

13,701

21,701Total current liabilities

479,266

486,077Note payable

-

280,0007% Convertible notes payable

-

790,000Total liabilities

479,266

1,556,077Mandatory convertible notes payable

-

543,500Commitments and contingenciesStockholders' deficit:Common Stock, $0.001 par value, 100,000,000 shares
authorized:61,450,976 and 36,056,265
shares issued and outstanding,respectively

61,452

36,057Additional paid-in capital

4,525,045

2,295,623Accumulated deficit

(5,022,057)

(4,242,582)Total stockholders' deficit

(435,560)

(1,910,902)Total liabilities and stockholders deficit
$
43,706
$
188,675  The accompanying
notes are an integral part of these condensed consolidated financial statements.  4    SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)  Three months
ended
September 30,
2008

Three months
ended
September 30,
2007

Nine months
ended
September 30, 2008

Nine months
ended
September 30,
2007Revenues
$
88,804
$
71,739
$
119,657
$
165,255Cost of Sales

12,888

81,006

24,366

223,492Gross Profit (Loss)

75,916

(9,267)

95,291

(58,237)Operating expenses

25,993

294,463

463,296

896,075Operating income (loss)

49,923

(303,730)

(368,005)

(954,312)Other income (loss):Interest
expense

-

(29,813)

(333,375)

(584,687)Loss on sale of fixed
assets

-

-

(40,362)

-Other

-

(4,759)

(37,733)

9,788Net Income (Loss)
$
49,923
$
(338,302)
$
(779,475)
$
(1,529,211)Net Loss per share, basic and
fully diluted
$
0.00
$
(0.01)
$
(0.02)
$
(0.04)Weighted average shares
outstanding, basic and
fully
diluted

61,450,976

36,056,265

50,608,882

36,037,515   The accompanying notes are an integral part of these condensed
consolidated financial statements.  5    SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS
DEFICIT NINE MONTHS ENDED SEPTEMBER 30, 2008 (UNAUDITED)  AdditionalCommon

Stock

Paid-in

AccumulatedShares

Amount

Capital

Deficit

TotalBalance, January 1, 2008
36,056,265
$
36,057
$
2,295,623
$
(4,242,582)
$
(1,910,902)Fair value of stock issued toconsultant
2,243,572

2,244

142,242

-

144,486Imputed interest onmodification of
conversionrates for convertible
debt
-

-

333,375

-

333,375Conversion of debt andpayables into common
stock
23,151,139

23,151

1,753,805

-

1,776,956Net Loss
-

-

-

(779,475)

(779,475)Balance, September 30, 2008
61,450,976
$
61,452
$
4,525,045
$
(5,022,057)
$
(435,560)   The accompanying
notes are an integral part of these condensed consolidated financial statements.  6    SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)  Nine Months ended September
30,2008

2007Operating activities:Net loss

$
(779,475)


$
(1,529,211)Adjustment to
reconcile net loss to net cash used in
operating
activities:Depreciation


46,877



77,331Non-cash interest
expense


333,375



505,964Net loss on fixed
asset disposals


40,362



-Equity based
compensation expense


144,486



5,625Changes in assets
and liabilities:Accounts
receivable


21,092



133,791Inventory


-



22,545Other
assets


(3,000)



80,910Accounts payable
and accrued expenses


(2,895)



1,063Net cash used in operating
activities


(199,178)



(701,982)Investing activities:Purchases of
furniture and equipment


-



(30,950)Net cash received
on sale of fixed assets


52,499



-Net cash
provided by (used in) investing activities


52,499



(30,950)Financing activities:Debt principal
payments


(1,096)



(228)Principal payments
on capital leases


(21,362)



(60,035)Proceeds from
issuance of convertible notes payable and debt


190,000



790,000Repayment of
advances from related party


(8,000)



-Net cash provided by financing
activities


159,542



729,737Change in cash and cash
equivalents


12,863



(3,195)Cash and cash equivalents, beginning
of period


17,737



50,425Cash and cash equivalents, end of
period

$
30,600


$
47,230Supplemental cash flow
information:Cash paid for
interest

$
24,384


$
6,646Cash paid for
income taxes


-



-Non Cash Investing and Financing
ActivitiesConversion of
debt, accrued interest and payables to
common stock


1,776,956



-   The
accompanying notes are an integral part of these condensed consolidated
financial statements.  7    SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE
MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED)  NOTE 1THE COMPANY
AND SIGNIFICANT ACCOUNTING POLICIES  The Company  Silvergraph International, Inc. ("Silvergraph" or the Company)
is a designer, manufacturer, marketer and branded retailer of fine-art
reproductions, art-based home decorative accessories, collectibles and gift
products. Silvergraph's primary products are canvas and paper lithographs as
well as other forms of fine-art reproductions. Silvergraph distributes products
through a variety of distribution channels, including corporate and
independently owned retail stores, independent dealers and strategic partners.
 We are currently assessing various strategies to best enhance value for
our shareholders including combining with a larger organization that would
benefit from our technology and platform.  To that end, on a confidential
basis, we have entered into formal discussions with multiple private companies,
have raised interim bridge capital to support our operations and have taken
significant steps to lower our cost of operations.  As of
and subsequent to the share exchange described below, the historical financial
statements included the combined accounts of Silvergraph LGT, LLC (Silvergraph
LLC) and its combined affiliate Lee Graphic Technologies, Inc. (LGT, and
combined with Silvergraph LLC also referred to as the Company). These
financial statements were combined due to the following facts:  · The companies have been operated as one business over the past
three (3) years, · The managing member and owners of 28% of Silvergraph LLCs
membership interests own 100% of LGT, and · The business assets, liabilities, business contacts and
intellectual property of LGT were transferred at no cost to Silvergraph LLC on
April 1, 2006, which was merged into New Era Studios, Inc. (New Era) on June
9, 2006, which then consummated a share exchange with Pinecrest Services, Inc.
(Pinecrest) effective June 23, 2006.  Culminating with the Companys share exchange effective June 23,
2006, the Company consummated a series of transactions as detailed
below: ·
On April 1, 2006, LGT transferred all of their business assets
and liabilities to Silvergraph LLC
·
Silvergraph LLC merged into New Era, a Nevada shell corporation,
effective June 9, 2006, and
·
On June 23, 2006, New Era was acquired by Pinecrest.  The
Company exchanged 100% of its outstanding common stock for 32,400,015 shares
of Pinecrest common stock. The transaction was accounted for as a
recapitalization with the Company deemed the accounting acquirer, and
Pinecrest the legal acquirer.  Additionally, the Company paid $280,000 to
certain shareholders of Pinecrest for 15,000,000 shares of their outstanding
common stock, which were immediately retired (See Note 3).  This payment,
along with other expenses associated with the share exchange, has been
reflected as reorganization expenses in the Companys accompanying income
statements.  Simultaneous with the closing of the share exchange,
Pinecrest changed its name to Silvergraph International, Inc.   8    SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE
MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED)  The Company (continued)  Intercompany balances and transactions have been eliminated in
consolidation.  The interim consolidated financial statements are
unaudited, but in the opinion of management of the Company, contain all
adjustments, which include normal recurring adjustments, necessary to present
fairly the financial position at September 30, 2008, and the results of
operations and cash flows for the three and nine months ended September 30, 2008
and 2007.  The results of operations for the three and nine months ended
September 30, 2008 may not be indicative of the full fiscal year. The Company's
audited financial statements as of and for the years ended December 31, 2007 and
2006 are included in its 10-KSB filing on April 15, 2008.  Going Concern  The
accompanying condensed consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. The Company has
suffered recurring losses from its operations since its inception and has an
accumulated deficit of $4,242,582at December 31, 2007 and
$5,022,057 at September 30, 2008 (unaudited).  Additionally, as of
September 30, 2008, the Company had a working capital deficiency of $445,666 and
a stockholders deficiency of $435,560.  The consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or amounts and classifications of
liabilities that might be necessary should the Company be unable to continue its
existence. The recovery of the Companys assets is dependent upon continued
operations of the Company.  In addition, the Company's recovery is
dependent upon future events, the outcome of which is undetermined. The Company
intends to continue to attempt to raise additional capital, but there can be no
certainty that such efforts will be successful.  Revenue
Recognition  The
Company recognizes revenue from gross product sales, including freight charges,
and revenues from the license of products, in compliance with Staff Accounting
Bulletin No. 101 ("SAB 101") and No. 104 (SAB 104) which require that
title and risk of loss have passed to the customer, there is persuasive evidence
of an arrangement, delivery has occurred or services have been rendered, the
sales price is fixed and determinable, collectibility is reasonably assured, and
customer acceptance criteria, if any, have been successfully demonstrated.  Impairment of
Long-Lived Assets  Long-lived assets and certain identifiable intangible assets to be
held and used are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. When such "triggering" events occur, the Company compares the
carrying value of long-lived assets to the undiscounted expected future cash
flows related to those assets. If this comparison indicates that impairment is
present, the amount of the impairment is calculated using discounted expected
cash flow using a weighted average cost of capital. Determination of
recoverability is based on an estimate of undiscounted future cash flows
resulting from the use of the asset and its eventual disposition. Measurement of
an impairment loss for long-lived assets and certain identifiable intangible
assets that management expects to hold and use are based on the fair value of
the asset. Long-lived assets and certain identifiable intangible assets to be
disposed of are reported at the lower of carrying amount or fair value less
costs to sell. Based upon Managements assessment, there were no indicators of
impairment of its long lived assets as of September 30, 2008 or December 31,
2007.  9    SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE
MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED)  Property and
equipment  Property and equipment is stated at cost less accumulated
depreciation and amortization. Repairs and maintenance costs are expensed as
incurred. Depreciation and amortization are computed on a straight-line basis
over the following estimated useful lives:  Machinery and
equipment

5-10
yearsFurniture and
fixtures

7
yearsLeasehold
improvements

Lesser of 7 to
10 years or life of leaseComputer
hardware and software

5
yearsVehicles

7
years  Equity-based
compensation  The
Company periodically issues stock options and warrants to employees and
non-employees in non-capital raising transactions for services and for financing
costs. The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 123R effective January 1, 2006, and is using the modified prospective method
in which compensation cost is recognized beginning with the effective date (a)
based on the requirements of SFAS No. 123R for all share-based payments granted
after the effective date and (b) based on the requirements of SFAS No. 123R for
all awards granted to employees prior to the effective date of SFAS No. 123R
that remained unvested on the effective date.  The
Company accounts for stock option and warrant grants issued and vesting to
non-employees in accordance with EITF No. 96-18: "Accounting for Equity
Instruments that are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services and EITF No. 00-18: Accounting
Recognition for Certain Transactions involving Equity Instruments Granted to
Other Than Employees whereas the value of the stock compensation is based upon
the measurement date as determined at either a) the date at which a performance
commitment is reached, or b) at the date at which the necessary performance to
earn the equity instruments is complete.  Use of
Estimates  The
preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Estimates are used in the accounting for
revenues, allowance for doubtful accounts, product returns and other sales
allowances, inventory reserves, depreciation and amortization, lease guarantees,
long-lived assets and income taxes. Actual results could differ from those
estimates.   10    SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE
MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED)  Significant
customers  The
Company made sales to a significant customer, comprising 100% and 74% of total
sales during the quarter and nine months ended September 30, 2008, respectively.
 One additional customer comprised 0% and 21% of total sales during the
quarter and nine months ended September 30, 2008, respectively.  Earnings (loss)
per share  Statement of Financial Accounting Standards No. 128, "Earnings per
Share", requires presentation of basic earnings per share ("Basic EPS") and
diluted earnings per share ("Diluted EPS"). Basic earnings (loss) per share is
computed by dividing earnings (loss) available to common stockholders by the
weighted average number of common shares outstanding during the period. Weighted
average numbers of shares outstanding have been retroactively restated for the
equivalent number of shares received by the accounting acquirer as a result of
the Exchange transaction as if these shares had been outstanding as of the
beginning of the earliest period presented. The 3,600,015 shares issued to the
legal acquirer are included in the weighted average share calculation from April
15, 2006, the date of the exchange agreement.  Diluted
earnings per share reflects the potential dilution, using the treasury stock
method, that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the Company.  In computing
diluted earnings per share, the treasury stock method assumes that outstanding
options and warrants are exercised and the proceeds are used to purchase common
stock at the average market price during the period.  Options and warrants
will have a dilutive effect under the treasury stock method only when the
average market price of the common stock during the period exceeds the exercise
price of the options and warrants. As the Company had a loss in the nine months
ended September 30, 2008 and 2007, basic and diluted loss per share are the
same.  At both September 30, 2008 and 2007, potentially dilutive securities
consisted of outstanding common stock purchase warrants and stock options to
acquire an aggregate of 835,770.  Fair value of
financial instruments  The
carrying amounts of cash, accounts receivable, accounts payable and accrued
expenses approximate fair value because of the short maturity of these items.
The carrying amounts of notes payable, convertible notes payable, its line of
credit and capital lease obligation approximate fair value, because the related
effective rates on these instruments approximate rates currently available to
the Company.  The
Company partially adopted SFAS 157 on January 1, 2008, delaying application
for non-financial assets and non-financial liabilities as permitted. This
statement establishes a framework for measuring fair value, and expands
disclosures about fair value measurements.   11    SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE
MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED)  SFAS
157 establishes a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value into three levels as follows:  

Level 1  quoted prices (unadjusted) in active markets
for identical asset or liabilities that the Company has the ability to
access as of the measurement date. Financial assets and liabilities
utilizing Level 1 inputs include active exchange-traded securities and
exchange-based derivatives.

Level 2  inputs other than quoted prices included within
Level 1 that are directly observable for the asset or liability or
indirectly observable through corroboration with observable market data.
Financial assets and liabilities utilizing Level 2 inputs include fixed
income securities, non-exchange-based derivatives, mutual funds, and
fair-value hedges.

Level 3  unobservable inputs for the asset or liability
only used when there is little, if any, market activity for the asset or
liability at the measurement date. Financial assets and liabilities
utilizing Level 3 inputs include infrequently-traded, non-exchange-based
derivatives and commingled investment funds, and are measured using
present value pricing models.  In
accordance with SFAS 157, the Company determines the level in the fair value
hierarchy within which each fair value measurement in its entirety falls, based
on the lowest level input that is significant to the fair value measurement in
its entirety.  The
Company had no financial assets measured and recorded at fair value on the
Companys Condensed Consolidated Balance Sheets on a recurring basis and their
level within the fair value hierarchy during the three and nine months ended
September 30, 2008.  Recent
Accounting Pronouncements  References to the FASB, SFAS and SAB herein refer to the
Financial Accounting Standards Board, Statement of Financial Accounting
Standards, and the SEC Staff Accounting Bulletin, respectively.  In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51. SFAS No. 160
establishes accounting and reporting standards that require that the ownership
interests in subsidiaries held by parties other than the parent be clearly
identified, labeled, and presented in the consolidated statement of financial
position within equity, but separate from the parents equity; the amount of
consolidated net income attributable to the parent and to the noncontrolling
interest be clearly identified and presented on the face of the consolidated
statement of income; and changes in a parents ownership interest while the
parent retains its controlling financial interest in its subsidiary be accounted
for consistently. SFAS No. 160 also requires that any retained noncontrolling
equity investment in the former subsidiary be initially measured at fair value
when a subsidiary is deconsolidated. SFAS No. 160 also sets forth the disclosure
requirements to identify and distinguish between the interests of the parent and
the interests of the noncontrolling owners. SFAS No. 160 applies to all entities
that prepare consolidated financial statements, except not-for-profit
organizations, but will affect only those entities that have an outstanding
noncontrolling interest in one or more subsidiaries or that deconsolidate a
subsidiary. SFAS No. 160 is effective for fiscal years, and interim periods
within those fiscal years, beginning on or after December 15, 2008. Earlier
adoption is prohibited. SFAS No. 160 must be applied prospectively as of the
beginning of the fiscal year in which it is initially applied, except for the
presentation and disclosure requirements. The presentation and disclosure
requirements are applied retrospectively for all periods presented.   12    SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE
MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED)  Recent
Accounting Pronouncements - continued  In
March 2008, the FASB issued SFAS No. 161 (FAS 161), Disclosures About
Derivative Instruments and Hedging Activities  an amendment of FAS 133. FAS
161 requires qualitative disclosures about objectives and strategies for using
derivatives, quantitative disclosures about fair value amounts of gains and
losses on derivative instruments, and disclosures about credit-risk-related
contingent features in derivative agreements. FAS 161 is effective for fiscal
years beginning after November 15, 2008. The Company does not expect the
implementation of FAS 161 to have a material impact on its consolidated
financial statements.  NOTE 2 BALANCE
SHEET COMPONENTS  Property and
equipment as of September 30, 2008 and December 31, 2007 was as follows:  2008

2007Machinery and
equipment
$
668,600
$
716,010Furniture and
fixtures

1,000

3,051Computer
hardware and software

3,066

8,628672,666

727,689Accumulated
depreciation and amortization

(662,560)

(577,843)$
10,106
$
149,846  Depreciation expense for the three months ended September 30, 2008
and 2007 was $5,391 and $25,925, and $46,877 and $77,331 for the nine months
ended September 30, 2008 and 2007 respectively.  General and administrative
expenses include $40,362 from the disposal of fixed assets.  This amount
includes $83,752 relating to the unamortized value of certain capital lease
equipment transferred to a shareholder.  NOTE 3DEBT  Convertible
Promissory Notes  In
February 2008 the Company issued convertible promissory notes in the aggregate
principal amount of $150,000 pursuant to a subscription agreement, dated January
25, 2008, as amended, between Silvergraph and Thomas G. Schuster and Antaeus
Capital Partners, LLC, accredited investors.  The subscription agreement
provided that the subscribers would purchase a minimum of $100,000 and a maximum
of $400,000 of 7% convertible promissory notes, due on June 30, 2008.  In
April, 2008, we issued an additional $40,000 of the convertible promissory notes
to two accredited investors. As of September 30, 2008, aggregate borrowings
under these convertible Notes Payable were $190,000.   13    SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE
MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED)  Convertible
Promissory Notes - continued  The
Company will pay all interest due and owing on each note by adding such amounts
to the then outstanding principal balance of each note, thereby increasing the
outstanding principal balance of each note. All the payments-in-kind shall
accrue interest as though such amounts were original principal indebtedness. The
Company will not pay any principal payments in cash prior to maturity.  If
the Company combines via merger, acquisition, reverse merger or similar process
with a private company doing business in the wall art industry (the
Combination), the outstanding principal amount of the notes together with all
accrued but unpaid interest will automatically convert into shares of the
Companys common stock at the closing of such Combination at the conversion
price, discussed below.  Each holder of a Note may convert in whole or in
part the outstanding principal plus accrued but unpaid interest into the
Companys common stock at a conversion price of the lower of $0.08 per share or
$1.08 divided by the reverse split ratio declared by the Board of Directors as
part of a Combination.  In the event that the Company issues additional
common stock, or securities convertible into common stock, at a price lower than
the conversion price while these notes are outstanding, the conversion price of
these notes will automatically adjust downward to such price at which the new
common stock has been issued.  The
conversion price of the note, however, shall never be adjusted to less than
$0.01 per share.  Additionally, if the Company does not complete an
anticipated Combination transaction with a private company by June 30, 2008
whereby the private company owns up to 90% of the surviving entity, the
conversion price shall automatically be reduced to the lower of (i) $0.002 or
(ii) the conversion price that would cause the majority holder of the notes to
own upon conversion the number of shares of common stock of the Company
determined to be 51% of the outstanding common stock on a fully-diluted basis
and the remaining holders of the notes to own a pro rata number of common shares
of common stock of the Company.  The Company also is required to register
the underlying shares of the convertible promissory notes on its first filed
registration statement subsequent to the issuance of such notes.  The
notes will be secured by all of the assets of New Era Studios, Inc., our
wholly-owned subsidiary, under a security agreement.  Silvergraph may not
prepay the notes and so long as the notes are outstanding, we must obtain
written approval from the note holders for certain actions identified in the
notes, including, but not limited to, the issuance of debt, acquisition or sale
of a material asset and issuance of dividends to common stockholders.  The
security agreement will be null and void if the notes convert into a majority of
Silvergraphs common stock.  In addition, the holders of the notes have a
right of first refusal on all equity financings contemplated by Silvergraph.  On June
30, 2008 Silvergraph and the holders of the 7% Notes due June 30, 2008 entered
into a 2nd Amendment to the 7% Notes due June 30, 2008 that
materially modifies the Notes according to the following:  1. Section 9.1 of the Note entitled Default  Applejack Art
Partner, Inc.   The first sentence of said section shall be
deleted and the following sentence inserted.  If the
Company does not complete a merger transaction with a private company approved
by the board of directors (Private Company), by the Maturity Date whereby the
Private Company owns up to 96% of the surviving entity, the Conversion Price
shall automatically be reduced to the lower of (i) $0.002 or (ii) the conversion
price that would cause the majority holder of the Notes to own upon conversion
the number of shares of common stock of the Company determined to be 51% of the
outstanding Common Stock on a fully-diluted basis and the remaining holders of
the Notes to own a pro rata number of common shares of common stock of the
Company (the Liquidated Damages Shares).  14    SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE
MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED) Convertible
Promissory Notes - continued  2. Section 5.0(a) of the Note entitled Optional Conversion.
 The Conversion Price (as defined in the Note) shall be lowered from $.08
to the lower of $.045 per share of common stock or the price per share of common
stock (referred to as X) derived from the following equation:  X
= .95/Y  X
is defined as the price per share of common stock Y
is defined as the reverse split ratio declared by the Companys Board of
Directors  3. Section
2.0 of the Note entitled Maturity. The Maturity Date shall be extended from
June 30, 2008 to August 31, 2008.  On
August 31, 2008 Silvergraph and the holders of the 7% Notes due August 31, 2008
entered into a 3nd Amendment to the 7% Notes due August 31, 2008 that
materially modifies the Notes according to the following:  1. Section 3.0 of the Note entitled Prepayment. The entire
section of shall be deleted and the following paragraph inserted.  Subject to Section 5(b) hereof, the Borrower may prepay the Note
in cash in an amount equal to the principal and accrued interest (Prepayment).
Other than as set forth in Section 5(a) and 5(b) hereof, the Borrower may not
prepay the Note.  2. Section 5.0(b) of the Note entitled Mandatory Conversion.
The entire section shall be deleted and the following paragraphs inserted.  Simultaneous with the closing of a transaction whereby the Company
combines via merger, acquisition, reverse merger or similar process with a
private company (Merger), this Note and accrued but unpaid interest shall
immediately and automatically convert into fully paid and nonassessable shares
of Common Stock in accordance with the following:  (i)  Should the Holder at its discretion decline Borrowers
offer of Prepayment, if any, within three (3) days of receipt of written
Prepayment notice from Borrower, then the conversion price shall be equal to
fifty percent (50%) of the purchase price of common stock or the conversion
price as the case may be paid by Investor(s) in a transaction closing
simultaneously with a Merger (Outside Investor) or in the case where a Merger
is completed without a simultaneous transaction with an Outside Investor, then
the conversion price shall be equal to fifty percent (50%) of four multiplied by
the EBITDA of the private company for the trailing twelve month period.     15    SIILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE
MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED)  Convertible Promissory Notes - continued  (ii) Should the Holder at its discretion accept Borrowers offer
of Prepayment, if any, within three (3) days of receipt of written Prepayment
notice from Borrower, then the Holder shall be entitled to Common Stock in
amount equal to the amount of principal and accrued interest of the Note
outstanding immediately preceding Prepayment divided by the purchase price of
common stock or the conversion price as the case may be paid by Investor(s) in a
transaction closing simultaneously with a Merger (Outside Investor) or in the
case where a Merger is completed without a simultaneous transaction with an
Outside Investor, then the conversion price shall be equal to four multiplied by
the EBITDA of the private company for the trailing twelve month period.  (iii) If the Borrower does not provide Holder the option of
Prepayment, then the conversion price shall be equal to twenty five percent
(25%) of the purchase price of common stock or the conversion price as the case
may be paid by Investor(s) in a transaction closing simultaneously with a Merger
(Outside Investor) or in the case where a Merger is completed without a
simultaneous transaction an with Outside Investor, then the conversion price
shall be equal to twenty five percent (25%) of four multiplied by the EBITDA of
the private company for the trailing twelve month period.  Upon the Mandatory
Conversion, this Note shall cease to exist and all rights and obligations of the
Borrower and Holder shall terminate.  3. Section 2.0 of the Note entitled Maturity. The Maturity
Date shall be extended from August 31, 2008 to October 31, 2008.  Convertible Notes
Payable  During
2006 the Company issued convertible notes payable (the Notes) in the aggregate
principal amount of $325,000 and warrants to purchase 143,000 shares of our
common stock to five accredited investors. The outstanding principal and
interest on the Notes are payable by the Company on or before August 31, 2008.
The notes bear interest at a rate of eight and one half percent (8.5%) per
annum. The Company will pay in kind quarterly all interest due and owing on each
note by adding such amounts to the then outstanding principal balance of each
note, thereby increasing the outstanding principal balance of each note. All the
payments-in-kind shall accrue interest as though such amounts were original
principal indebtedness. The Company will not pay any principal payments in cash
prior to maturity unless we close any equity financing or financings with gross
proceeds totaling at least $2,000,000 and the blended equity offering price is
less than $0.45 per share.  Each
holder of a Note may convert in whole or in part the outstanding principal plus
accrued but unpaid interest into the Companys common stock at a conversion
price of $0.45 per share. In the event that the Company issues additional common
stock, or securities convertible into common stock, at a price lower than the
conversion price while these notes are outstanding, the conversion price of
these notes will automatically adjust downward to such price at which the new
common stock has been issued.  The conversion price of the Note, however,
shall never be adjusted to less than $0.01 per share.  If the Company
engages in any equity based financing or a combination of equity financings with
gross proceeds totaling at least $2,000,000, the outstanding principal amount of
the notes together with all accrued but unpaid interest will automatically
convert into shares of the Companys common stock five business days after the
closing of such equity financing(s), provided, however, that if the blended per
share purchase price of the securities purchased in such equity financing(s) is
less than the conversion price, the  16    SIILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE
MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED)  Convertible Notes
Payable  continued  Company
will have the option to redeem the outstanding principal and interest of the
notes. If the Company does not elect to redeem the notes, the conversion price
will be the price equal to a 10% discount to the equity offering price.  In
addition to the Notes, the Company issued 143,000 warrants to the five
accredited investors. The exercise price of each warrant is equal to $0.65 per
share. The warrants shall remain exercisable for a period of three years from
the date of issue. The Company may compel the exercise of the warrants in full
if our common stock trades at or above two and one half (2 1/2) times the
exercise price for 15 consecutive trading days. Based upon the fair value of the
Companys common stock at the time of the issuance of the Notes and warrants,
the value of the beneficial conversion feature and warrants are immaterial and
have, therefore, not been recorded in the Companys financial statements.  The
subscription agreements we entered into with the five accredited investors
require us to prepare and file with the Securities and Exchange Commission a
registration statement under the Securities Act of 1933 registering the common
stock issuable upon conversion of the notes (up to $2,000,000 original principal
amount of notes) and 100% of the shares of our common stock issuable upon
exercise of the warrants issued in connection with the purchase of the notes.
These demand registration rights are, based upon the underlying agreement, best
efforts from the Companys basis and include no penalties for not meeting such
deadlines.  During
2007, the Company issued $465,000 of additional convertible notes and 204,600
warrants.  These notes have the same characteristics as the notes discussed
above, except that they convert into common shares at a price of $0.22 per
share.  As such, the conversion rates of the notes issued during 2006 were
reset to $0.22 per share resulting in a beneficial conversion feature of $75,055
which was charged to interest expense during the quarter ended June 30, 2007.
 At December 31, 2007, $790,000 was outstanding under these notes.  Subsequent to the issuance of the securities discussed above, the
Company issued Mandatory Convertible Notes Payable (See Note 4).  These
notes have the characteristics discussed below, including the right to convert
into common shares at a price of $0.10 per share.  As such, the conversion
rates of all the Convertible Notes Payable reset to $0.10 per share, resulting
in an additional beneficial conversion feature of $430,909 which was charged to
interest expense during the quarter ended June 30, 2007.  On
April 29, 2008 the $790,000 notes plus accrued interest thereon of $91,557 was
converted into 11,926,906 common shares (at $.074 per share).  As the
actual conversion rate of $.074 was less than the conversion terms of the note,
the Company recognized an additional interest charge of $248,907 during the
period ending June 30, 2008 relating to the modification of the conversion
terms.  Line
of credit  The
Company has a $50,000 revolving bank line-of-credit, which automatically renews
unless an event of default occurs.  Borrowings under the facility bear
interest at the bank's prime rate plus 2% (8.5% at September 30, 2008).
 The facility is secured by substantially all of the Company's assets. At
September 30, 2008 and December 31, 2007, the Company had $42,363 and $43,593
outstanding under this line of credit.   17    SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE
MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED)  Note payable -
stockholder  One
of our shareholders loaned $280,000 to the Company in June 2006. In
consideration of this loan, the Company issued a promissory note in the
principal amount of $280,000, plus 7% interest per annum on the outstanding
principal, which note was amended and restated in its entirety on August 14,
2006. The amended and restated note was originally due and payable by the
Company on September 23, 2006.  The Company issued a second amended
and restated promissory note to extend the maturity date of the note from
September 23, 2006 to December 31, 2006.  The shareholder did not, pursuant
to the terms of the amended and restated note, elect to require the Company to
pay to it the outstanding principal balance and accrued interest on the note
during the period beginning September 23, 2006 and continuing up to and
including the issuance of the second amended and restated note on September 27,
2006.  The second amended and restated note was amended and restated in its
entirety by the Companys issuance of a third amended and restated promissory
note on December 31, 2006, which extends the maturity date of the note from
December 31, 2006 to June 30, 2007.During
May 2007, the Company and the note holder agreed that upon the closing of a New
Notes capital raise with net proceeds of at least $500,000, the note holder will
agree to receive a cash payment of 10% of the net proceeds of the New Notes and
convert the remaining balance to the New Notes or other security containing
materially similar characteristics. As of December 31, 2007, $280,000 of this
note payable was outstanding.  On
April 2008, the $280,000 note and $31,251 of accrued interest was converted into
3,890,638 common shares (at $.08 per share).  Factor Agreement  During
2007, the Company entered into an accounts receivable factoring agreement.
 Such agreement provides the factor with a two percent (2%) fee on the face
amount of any receivable factored, and an additional fee of one and one-half
percent (1.5%) for every subsequent ten day period that such account is unpaid
by the Companys customer.  As of December 31, 2007, the Company had no
accounts receivable subject to such factoring agreement, nor did the Company
have any amounts due to such factor.  During the first quarter of 2008, the
Company cancelled this agreement.  Due to
Shareholder  During
2007, the Company received $21,701 of advances from shareholders.  This
amount is due upon demand from such shareholders, and bear interest at a rate of
ten percent (10%) per annum.  The balances of such advances were $13,701
and $21,701 as of September 30, 2008 and December 31, 2007.  18    SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE
MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED)  NOTE 4- MANDATORY
CONVERTIBLE NOTES PAYABLE  During
2007 the Company issued mandatory convertible notes payable (the New Notes) in
the aggregate principal amount of $543,500, which was outstanding as of December
31, 2007. The notes bear interest at a rate of ten percent (10%) per annum. The
Company will pay interest via cash or in stock, at a 10% discount to the market
price of the Companys common stock, quarterly.  All principal and unpaid
interest was due on August 31, 2009.  The New
Notes have the following conversion provisions:  (a) Optional Conversion.  On or before the payment of the
Note in full, the Holder may convert the principal amount owing on this Note,
together with all accrued and unpaid interest, into fully paid and nonassessable
shares of Common Stock at a conversion price per share equal to $0.10 (the
Conversion Price), subject to adjustment as set forth herein.  (b) Forced Conversion. Subject to the Corporations duty to
reserve and keep available out of its authorized but unissued shares of Common
Stock, such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of the Note, after
two years of issuance, the Company may convert this Note if the price of the
Companys Common Stock is equal to or above two (2) times the Conversion Price
for a period of ten (10) consecutive trading days and the Companys 90 day
average trading volume is equal to or above 25,000 shares per day and such
shares shall be converted at the Conversion Price.  (c) Mandatory Conversion.  Upon the establishment of the
Class A Senior Convertible Preferredseries of stock by the Company
entitled Silvergraph International, Inc. Certificate of Designation of Class A
Senior Convertible Preferred Stock, this Note and accrued but unpaid interest
shall immediately and automatically convert into Class A Senior Convertible
Preferred Stock at a conversion price per Preferred Share equal to one dollar
($1.00).   Upon the Mandatory Conversion, this Note shall cease to
exist and all rights and obligations of the Borrower and Holder shall terminate.
 The Company shall provide written notice to the Holder of the Mandatory
Conversion including the date of the establishment of the Class A Senior
Convertible Preferred Stock and shall issue to Holder fully paid and
nonassessable shares of Class A Senior Convertible Preferred Stock as soon as
reasonably practicable.  The
holders of the New Notes shall have the right of first refusal on all equity
financings contemplated by the Company.  The Company will prepare and file
a registration statement covering the resale of the Common Stock issuable upon
conversion of the Note within 90 days after the issue date of the Note.
 The Company will use its best efforts to have the Registration Statement
declared effective by the Securities and Exchange Commission with 90 days after
the filing.  On
April 29, 2008 the $543,500 notes plus accrued interest of $25,031 was converted
into 7,094,444 common shares (at $.08 per share). As the actual conversion rate
of $.08 was less than the conversion terms of the note, the Company recognized
an additional charge of $112,731 during the period relating to the modification
of the conversion terms.   19    SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE
MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED)  NOTE
5EQUITY  On
January 22, 2007 we entered into an agreement with RJ Falkner & Company,
Inc. for a period of at least one year whereby RJ Falkner & Company, Inc.
will provide investor relations support to the Company beginning February 1,
2007.  The agreement requires the Company to pay a cash retainer of $3,000
per month in advance and to cover expenses.  Further, the Company shall
issue a total of 56,250 shares of its restricted common stock to R. Jerry
Falkner in installments of 18,750 shares every three months until paid in full.
 The agreement allows the Company to halt issuance of future stock grants
by agreeing to increase the monthly retainer to $5,000.  The Company also
agreed to issue R. Jerry Falkner a ten-year stock option to purchase 100,000
shares of the Companys restricted common stock with an exercise price of $0.72
per share.  During the year ended December 31, 2007 the Company issued the
56,250 shares valued at $5,625 and included such cost as an expense in the
accompanying statement of operations.  The
agreement carries registration rights for the common stock to be issued whereby
the Company agreed to register the shares with the Securities and Exchange
Commission within 24 months of the start date of the agreement.  Should the
Company fail to register the shares, the previously granted option shall become
a cashless exercise option  On May
6, 2008, we entered into a termination and settlement agreement with RJ Falkner
& Company, Inc. whereby we agreed to issue 264,646 shares of restricted
common (of which 175,010 had been previously delivered) in exchange for a
release of all claims.  20    SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE
MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED)  NOTE 6 DEBT TO
EQUITY CONVERSIONS AND COMMON STOCK WARRANTS  Debt to Equity
Conversions  On
April 30, 2008 the Company issued 22,911,979 shares of restricted common stock
to holders of the Note payable, Convertible notes payable and the Mandatory
convertible notes payable in exchange for the retirement of the debt securities.
 Due to a change in the conversion rates of such debt during the quarter
ended June 30, 2008, the Company recognized imputed interest expense of
$333,375, which represents the estimated fair value of the additional common
stock issued to such debt holders resulting from such conversion rate change.
 Furthermore, the Company issued 239,160 shares of its common stock in
exchange for the settlement of $150,822 of accrued expenses during the nine
months ended September 30, 2008.  Common Stock
Warrants  During
2006, the Company granted a warrant to purchase 488,170 shares of common stock
in connection with professional services performed by the Companys Chief
Financial Officer.  The warrant is exercisable at $0.14 per share, has a
five year term and is fully vested, with the Company holding a right to cancel
50% of the units underlying the warrant, with such right to cancel such
remaining warrants decreasing ratably on a monthly basis over a one year period
ending June 30, 2007, upon the occurrence of certain events as defined within
the agreement.  Based upon an amendment to the Companys agreement with its
Chief Financial Officer, such cancellation right expired on December 31, 2006.
 The Company estimated the fair value of the warrant to be $30,174 as of
the date of grant, all of which was expensed during 2006.  The
fair value of the warrant was estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions for the periods indicated:  Dividend
yield
                                          -- Risk-free
interest rate
                          4.50% Expected
volatility
                             50.00% Expected
life of options
                       4.00
years  The
Companys other outstanding warrants related to warrants issued in conjunction
with the issuance of Convertible Notes during the third quarter of 2006 (See
Note 3).    21    SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE
MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED)  NOTE 7  INCOME
TAXES  The
Company did not provide for any Federal or state income tax expense during the
quarters or nine months ended September 30, 2008 and 2007 as a result of the
availability of net operating loss carryforwards.  As of September 30,
2008, the Company had provided a 100% valuation allowance with respect to such
Federal and state net operating loss carryforwards, as it cannot determine that
it is more likely than not that it will be able to realize such deferred tax
assets.  This valuation allowance represents the difference in the
Companys effective income tax of 0% and the Federal statutory income tax rate
of 34% for the year ended December 30, 2007.  As of
September 30, 2008, for Federal and state income tax purposes, the Company had
approximately $2,200,000 in net operating loss carryforwards expiring through
2015.  Internal Revenue Code Section 382 substantially restricts the
ability of a corporation to utilize existing net operating losses in the event
of a defined "ownership change".  The Company has determined that there
will likely be significant limitations on its ability to utilize its net
operating loss carryforwards in future periods for Federal income tax purposes
due to such ownership changes.  Effective January 1, 2007, the Company adopted Financial
Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in
Income Taxes (FIN 48) an interpretation of FASB Statement No. 109, Accounting
for Income Taxes. The Interpretation addresses the determination of whether tax
benefits claimed or expected to be claimed on a tax return should be recorded in
the financial statements. Under FIN 48, the Company may recognize the tax
benefit from an uncertain tax position only if it is more likely than not that
the tax position will be sustained on examination by the taxing authorities,
based on the technical merits of the position. The tax benefits recognized in
the financial statements from such a position should be measured based on the
largest benefit that has a greater than fifty percent likelihood of being
realized upon ultimate settlement. FIN 48 also provides guidance on
derecognition, classification, interest and penalties on income taxes,
accounting in interim periods and requires increased disclosures. At the date of
adoption, and as of September 30, 2008 and December 31, 2007, the Company does
not have a liability for unrecognized tax benefits.  The
Company files income tax returns in the U.S. federal jurisdiction and various
states. The Company is subject to U.S. federal or state income tax examinations
by tax authorities for five years after 2002. During the periods open to
examination, the Company has net operating loss and tax credit carry forwards
for U.S. federal and state tax purposes that have attributes from closed
periods. Since these NOLs and tax credit carry forwards may be utilized in
future periods, they remain subject to examination.  The
Companys policy is to record interest and penalties on uncertain tax provisions
as income tax expense. As of September 30, 2008, the Company has no accrued
interest or penalties related to uncertain tax positions.   22    SILVERGRAPH INTERNATIONAL, INC. AND SUBSIDIARY NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE
MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED)  NOTE 8 
COMMITMENTS AND CONTINGENCIES  Consulting
Agreement  The
Company entered into consulting agreement with a consultant that was effective
January 10, 2008.  For a term of one year, the consultant will provide
consulting services in connection with management consulting, corporate finance
and shareholder communications and will use it best efforts to introduce the
Company to various members of the financial community.  In consideration
for the consultants services the Company agreed to pay $1,000 per month until
April 31, 2008 and $3,000 a month thereafter for the remainder of the one year
term.  The Company issued 1,000,000 shares, valued at $45,000, to the
consultant upon the signing of the agreement and agreed to issue 800,000 shares
to the consultant upon the closing of the Companys combination with a private
company provided such combination occurred on or before March 31, 2008.  As
such combination did not occur as of March 31, 2008, the Company did not issue
the additional 800,000 shares to the consultant.  These shares are
restricted and have piggy back registration rights.  In the event that
the consultant introduces the Company to an institution or individual that
provides funding to the Company, then the Company will pay five percent of the
total amount of the net transaction to the consultant.  Litigation  From
time to time, the Company is involved in various legal proceedings arising from
the normal course of its business activities. Any adverse outcome from these
matters is currently not expected to have a material adverse impact on the
results of operations, cash flows or financial position of the Company, either
individually or in the aggregate.  NOTE 9 
SUBSEQUENT EVENT  Effective October 31, 2008, the Company entered into an Amendment
to Loan Transaction Agreement (the Amendment) under the terms of which certain
holders of 7% convertible promissory notes described under Note 3, agreed to
extend the due date on the notes to December 15, 2008, in exchange for which the
Company agreed to issue to the holders, pro rata in proportion to their Note
amounts, a total of 9,000,000 shares of restricted common stock.  This
transaction is described in a Form 8-K filed by the Company on November 17,
2008.    23    In this quarterly report the words "we," "us," "our," and the
"Company" refer to Silvergraph International, Inc. and New Era Studios, Inc. (as
statutory successor in interest to Silvergraph LGT, LLC).  FORWARD LOOKING STATEMENTS  When
used in this report, the words may,  expect, anticipate, continue,
estimate, project, intend, and similar expressions are intended to
identify forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934
regarding events, conditions, and financial trends that may affect the Companys
future plans of operations, business strategy, operating results, and financial
position.  Persons reviewing this report are cautioned that any
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties and actual results may differ materially from
those included within the forward-looking statements as a result of various
factors.   Statements made in this Form 10-Q that are not historical or
current facts are  "forward-looking  statements" made pursuant to the
safe harbor  provisions of Section 27A of the  Securities Act of 1933,
as amended, and Section 21E of the Securities  Exchange Act of 1934, as
amended.  We wish to caution readers not to place undue reliance on any
such forward-looking statements, which speak only as of the date made.  Any
forward-looking statements represent our best judgment as to what may occur in
the future.  These forward-looking statements include our plans and
objectives for our future growth, including plans and objectives related to the
consummation of acquisitions and future private and public issuances of our
equity and debt securities.   The forward-looking statements included
herein are based on current expectations that involve numerous risks and
uncertainties.  Assumptions relating to the foregoing involve judgments
with respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond our control.
 Although we believe that the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could be inaccurate and,
therefore, there can be no assurance that the forward-looking statements
included in this Form 10-Q will prove to be accurate.   In light of
the significant uncertainties inherent in the forward-looking statements
included herein, you should not regard the inclusion of such information as our
representation or the representation of any other person that we will achieve
our objectives and plans.  We disclaim any obligation subsequently to
revise any forward-looking statements to reflect events or circumstances after
the date of such statement or to reflect the occurrence of anticipated or
unanticipated events.  ITEM 2.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS  Executive
Overview  In
2007, we experienced significant challenges due to the unexpected contraction of
our business with our largest client, Home Interiors & Gifts.  In
response, we attempted to accelerate the development of our in-house sales
channel to home furnishings and accessory retailers. To that end, in July 2007
we hired an art sales, marketing and design company based in Seattle which
brought to us an existing client base.   To service and grow the
Seattle groups client base, we needed to raise capital that we were unable to
accomplish on terms acceptable to us.  Accordingly, we terminated our
contract with the Seattle group in December 2007.   Separately,
without sufficient resources we were forced to cease our investment in the
development of TxTura.  Given the challenges we were experiencing in
developing sales channels and the unexpected contraction of our largest client,
in December 2007, the board of directors determined that we should seek to merge
with a larger art company with established sales channels which could benefit
from our technology.   24    In 2008 and beyond, we are assessing various strategies to best
enhance value for our shareholders including combining with a larger
organization that would benefit from our technology and platform.  To that
end, on a confidential basis, we have entered into formal discussions with
multiple private companies, have raised interim bridge capital to support our
operations and have taken significant steps to lower our cost of operations.  Liquidity and Capital Resources  We
derived our primary source of funds during the nine months ended September 30,
2008 from the sale of additional equity and debt securities. Working capital as
of September 30, 2008 was negative $445,666 as compared to negative working
capital of $727,248 as of December 31, 2007. The cash balance at September
30, 2008 was $30,600 compared to $17,737 at December 31, 2007.  Net
cash used in operating activities was $199,178 for the nine months ended
September 30, 2008, as compared to $701,982 for the nine months ended September
30, 2007.  During each period presented, we used net cash principally to
fund our net losses.  Net
cash provided by financing activities was $159,602 during the nine months ended
September 30, 2008, as compared to net cash provided by financing activities of
$729,737 for the nine months ended September 30, 2007. Net cash provided by
financing activities during 2007 was principally related to the sale of
additional debt and equity securities of $790,000.  The Company also issued
debt securities during the nine months ended September 30, 2008, netting
proceeds of $190,000.  We have
suffered recurring losses from operations and have an accumulated deficit of
approximately $5,022,057 and $4,242,582 at September 30, 2008 and December 31,
2007.  Additionally, as of November 14, 2008, we had cash and cash
equivalents of $10,308.12 which will allow us to sustain operations for
approximately two months.  Primarily as a result of our recurring losses
and our lack of liquidity, we have received a report from our independent
auditors for our financial statements for the year ended December 31, 2007 that
includes an explanatory paragraph describing the uncertainty as to our ability
to continue as a going concern. To continue our operations and to grow our
current operations and to make acquisitions, if any, under our current business
model during the next twelve months, we will need to secure additional working
capital, by way of equity or debt financing, or otherwise.  After this
twelve month period, we may need additional financing for working capital, and
in the case of acquisitions for payment of seller notes and future earned cash
to sellers of acquired companies. There can be no assurance that we will be able
to secure sufficient financing or on terms acceptable to us. If adequate funds
are not available on acceptable terms, we would need to delay, limit or
eliminate some or all of our proposed operations, and we may be unable to
successfully promote our products or develop new or enhanced products or
prosecute acquisitions, any of which could lower our revenues and net income, if
we achieve profitability in the future.  If we raise additional funds
through the issuance of convertible debt or equity securities, the percentage
ownership of our current stockholders is likely to be diluted, unless some of
our current stockholders were to invest in subsequent convertible debt or equity
financings, and some of the newly issued securities may also have rights
superior to those of the common stock.  Additionally, if we issue or incur
debt to raise funds, we may be subject to limitations on our operations.  Debt to Equity
Conversion  During
2006 and 2007 we entered into convertible equity financings in which we received
an aggregate of $1,333,500.  The terms of the convertible instruments are
discussed below. On April 30, 2008 the Company issued 22,911,979 shares of
restricted common stock to holders of, Convertible notes payable and the
Mandatory convertible notes payable and the Note payable in exchange for the
retirement of the debt securities.  (See Note 6 to the financial
statements.)   25    Convertible Notes Payable.  During 2006 we
issued 8.5% convertible pay in kind (PIK) notes in the aggregate principal
amount of $325,000 and warrants to purchase 143,000 shares of our common stock
to accredited investors.  During 2007 we issued additional 8.5% convertible
PIK notes in the aggregate principal amount of $465,000 and warrants to purchase
204,600 shares of our common stock to accredited investors.  We issued the
notes and warrants pursuant to subscription agreements with each investor.
 The notes bore interest at a rate of eight and one half percent (8.5%) per
annum.  Each holder of a note could convert in whole or in part the
outstanding principal plus accrued but unpaid interest into our common stock at
a conversion price of $0.22 per share.  We used the proceeds of this
financing for general working capital purposes.  The outstanding principal
and interest on the notes were payable by us on or before August 31, 2008.
 We converted these notes into 11,926,905 shares of common stock.  Mandatory Convertible Notes.  During 2007 the
Company issued mandatory convertible notes payable (the New Notes) in the
aggregate principal amount of $543,500, which was outstanding as of December 31,
2007. The notes bore interest at a rate of ten percent (10%) per annum. The
Company could pay interest via cash or in stock, at a 10% discount to the market
price of the Companys common stock, quarterly.  All principal and unpaid
interest was due on August 31, 2009. We converted the Mandatory note into
7,094,434 shares of common stock.  Note Payable.  The Edward Brian ODwyer
Separate Property Trust, one of our shareholders, loaned to New Era Studios,
Inc., our wholly-owned subsidiary, $280,000 in June 2006. In consideration
of this loan, New Era issued a promissory note on June 23, 2006 to and in
favor of the ODwyer trust in the principal amount of $280,000, plus 7% interest
per annum on the outstanding principal, which note was amended and restated in
its entirety on August 14, 2006. The amended and restated note was originally
due and payable by New Era on September 23, 2006, however, this note was
amended and restated on three occasions and finally was extended to December 31,
2007.  As of December 31, 2007, $280,000 of this note payable was
outstanding and we converted this note into 3,890,640 shares of common
stock.  Bridge Financing  In
February 2008 the Company issued convertible promissory notes in the aggregate
principal amount of $150,000 pursuant to a subscription agreement, dated January
25, 2008, as amended, between Silvergraph and Thomas G. Schuster and Antaeus
Capital Partners, LLC, accredited investors.  The subscription agreement
provided that the subscribers would purchase a minimum of $100,000 and a maximum
of $400,000 of 7% convertible promissory notes, due on June 30, 2008.  In
April, 2008, we issued an additional $40,000 of the convertible promissory notes
to two accredited investors. We intend to use the $190,000 for debt repayment
and working capital.  The Company will pay all interest due and owing on
each note by adding such amounts to the then outstanding principal balance of
each note, thereby increasing the outstanding principal balance of each note.
All the payments-in-kind shall accrue interest as though such amounts were
original principal indebtedness. The Company will not pay any principal payments
in cash prior to maturity.  If the Company combines via merger,
acquisition, reverse merger or similar process with a private company doing
business in the wall art industry (the Combination), the outstanding principal
amount of the notes together with all accrued but unpaid interest will
automatically convert into shares of the Companys common stock at the closing
of such Combination at the conversion price, discussed below.  Each
holder of a Note may convert in whole or in part the outstanding principal plus
accrued but unpaid interest into the Companys common stock at a conversion
price of the lower of $0.045 per share or $1.08 divided by the reverse split
ratio declared by the board of directors as part of a Combination.  In the
event that the Company issues additional common stock, or securities convertible
into common stock, at a price lower than the conversion price while these notes
are outstanding, the conversion price of these notes will automatically adjust
downward to such price at which the new common stock has been issued.  The
conversion price of the note, however, shall never be adjusted to less than
$0.01 per share.  Additionally, if the Company does not complete an
anticipated Combination transaction with a private company by June 30, 2008
whereby the private company owns up to 90%  26    of the surviving entity, the conversion price shall automatically
be reduced to the lower of (i) $0.002 or (ii) the conversion price that would
cause the majority holder of the notes to own upon conversion the number of
shares of common stock of the Company determined to be 51% of the outstanding
common stock on a fully-diluted basis and the remaining holders of the notes to
own a pro rata number of common shares of common stock of the Company.  The
Company also is required to register the underlying shares of the convertible
promissory notes on its first filed registration statement subsequent to the
issuance of such notes.  The
notes will be secured by all of the assets of New Era Studios, Inc., our
wholly-owned subsidiary, under a security agreement.  Silvergraph may not
prepay the notes and so long as the notes are outstanding, we must obtain
written approval from the note holders for certain actions identified in the
notes, including, but not limited to, the issuance of debt, acquisition or sale
of a material asset and issuance of dividends to common stockholders.  The
security agreement will be null and void if the notes convert into a majority of
Silvergraphs common stock.  In addition, the holders of the notes have a
right of first refusal on all equity financings contemplated by Silvergraph.  On June
30, 2008 Silvergraph and the holders of the 7% Notes due June 30, 2008 entered
into a 2nd Amendment to the 7% Notes due June 30, 2008 that
materially modified the Notes and extended them until August 31, 2008. If the
Company does not complete a merger transaction with a private company approved
by the board of directors by the maturity date whereby the private company owns
up to 96% of the surviving entity, the conversion price shall automatically be
reduced to the lower of (i) $0.002 or (ii) the conversion price that would cause
the majority holder of the notes to own upon conversion the number of shares of
common stock of the Company determined to be 51% of the outstanding common stock
on a fully-diluted basis and the remaining holders of the notes to own a pro
rata number of common shares of common stock of the Company.  In addition,
the optional conversion price was lowered from $.08 to the lower of $.045 per
share of common stock or the price per share of common stock based upon the
formula outlines in the amendment.  On
August 31, 2008 Silvergraph and the holders of the 7% Notes due August 31, 2008
entered into a 3nd Amendment to the 7% Notes due August 31, 2008 that
materially modifies the Notes according to the following:  1. Section 3.0 of the Note entitled Prepayment. The entire
section of shall be deleted and the following paragraph inserted.  Subject to Section 5(b) hereof, the Borrower may prepay the Note
in cash in an amount equal to the principal and accrued interest (Prepayment).
Other than as set forth in Section 5(a) and 5(b) hereof, the Borrower may not
prepay the Note.  2. Section 5.0(b) of the Note entitled Mandatory Conversion.
The entire section shall be deleted and the following paragraphs inserted.  Simultaneous with the closing of a transaction whereby the Company
combines via merger, acquisition, reverse merger or similar process with a
private company (Merger), this Note and accrued but unpaid interest shall
immediately and automatically convert into fully paid and nonassessable shares
of Common Stock in accordance with the following:  (i)  Should the Holder at its discretion decline Borrowers
offer of Prepayment, if any, within three (3) days of receipt of written
Prepayment notice from Borrower, then the conversion price shall be equal to
fifty percent (50%) of the purchase price of common stock or the conversion
price as the case may be paid by Investor(s) in a transaction closing
simultaneously with a Merger (Outside Investor) or in the case where a Merger
is completed without a simultaneous transaction with an Outside Investor, then
the conversion price shall be equal to fifty percent (50%) of four multiplied by
the EBITDA of the private company for the trailing twelve month period.  27     (ii) Should the Holder at its discretion accept Borrowers offer
of Prepayment, if any, within three (3) days of receipt of written Prepayment
notice from Borrower, then the Holder shall be entitled to Common Stock in
amount equal to the amount of principal and accrued interest of the Note
outstanding immediately preceding Prepayment divided by the purchase price of
common stock or the conversion price as the case may be paid by Investor(s) in a
transaction closing simultaneously with a Merger (Outside Investor) or in the
case where a Merger is completed without a simultaneous transaction with an
Outside Investor, then the conversion price shall be equal to four multiplied by
the EBITDA of the private company for the trailing twelve month period.  (iii) If the Borrower does not provide Holder the option of
Prepayment, then the conversion price shall be equal to twenty five percent
(25%) of the purchase price of common stock or the conversion price as the case
may be paid by Investor(s) in a transaction closing simultaneously with a Merger
(Outside Investor) or in the case where a Merger is completed without a
simultaneous transaction an with Outside Investor, then the conversion price
shall be equal to twenty five percent (25%) of four multiplied by the EBITDA of
the private company for the trailing twelve month period.  Upon
the Mandatory Conversion, this Note shall cease to exist and all rights and
obligations of the Borrower and Holder shall terminate.  3. Section 2.0 of the Note entitled Maturity. The Maturity
Date shall be extended from August 31, 2008 to October 31, 2008.  Effective October 31, 2008, the Company entered into an Amendment
to Loan Transaction Agreement (the Amendment) under the terms of which certain
holders of 7% convertible promissory notes described under Note 3, agreed to
extend the due date on the notes to December 15, 2008, in exchange for which the
Company agreed to issue to the holders, pro rata in proportion to their Note
amounts, a total of 9,000,000 shares of restricted common stock.  This
transaction is described in a Form 8-K filed by the Company on November 17,
2008.  Mirador Consulting, Inc. Agreement  Silvergraph entered into Consulting Agreement with Mirador
Consulting, Inc., a Florida Corporation (Mirador) that was effective as of
January 10, 2008.  For a term of one year, Mirador will provide consulting
services in connection with management consulting, corporate finance and
shareholder communications and will use it best efforts to introduce Silvergraph
to various members of the financial community.  In consideration for
Miradors service we will pay $1,000 per month until April 31, 2008 and $3,000 a
month thereafter for the remainder of the one year term.  We issued
1,000,000 shares to Mirador upon the signing of the Consulting Agreement and
agreed to issue 800,000 shares to Mirador upon the closing of our combination
with a private company provided the merger was completed on or before March 31,
2008.  These shares are restricted and have piggy back registration
rights.  In the event that Mirador introduces Silvergraph to an institution
or individual that provides funding to the Company, then we will pay five
percent of the total amount of the net transaction to Mirador.  Mirador
agreed to maintain the confidentiality of any material non-public information or
data it might receive from Silvergraph, unless we provide written consent and
approval for the disclosure.  The parties agreed to indemnify each other
for any damages caused by the other party and the consulting agreement may be
terminated with or without cause by providing a thirty day written notification
to the other party.   28    Quarters ended September 30, 2008 and 2007 (all amounts for
these periods are unaudited)  Revenues.    Our revenues increased
$17,065 or 24%, to $88,804 for the three months ended September 30, 2008, as
compared to $71,739 for the three months ended September 30, 2007.
 The increase in revenues was due primarily to increased sales from one
customer.  Gross profit.    Cost of sales consists
primarily of raw material and component costs, manufacturing and supervisory
labor, manufacturing overhead costs and royalties.   The gross profit for the three months ended September 30, 2008 was
$75,916, an increase of $85,183 or 100% as compared to a negative $9,267 for the
three months ended September 30, 2007.  The Companys significant increase
in gross margin during the third quarter of 2008 versus 2007 was due to
 our efforts to contain both fixed and variable costs.  Operating expenses.    Operating
expenses consist of selling and marketing expenses, which are primarily
salaries, commissions and promotional expenses, and general and administrative
expenses, which are primarily salaries and bonuses, rent expense, depreciation
and professional services such as legal and accounting fees.  Operating expenses decreased by $268,470 or 91% to $25,993 for the
three months ended September 30, 2008 versus $294,463 for the three months ended
September 30, 2007.  The decrease in operating expenses was principally due
to additional cost cutting measures enacted by the Company during 2008.   Other income (expense).    Other income
(expense) principally consists of interest income and expense, as well as
non-operational revenues or expenses earned or incurred by us.  We had no
other expense during the three months ended September 30, 2008 versus other
expense of $34,572 during the three months ended September 30, 2007.  The
decrease in the balance was due to the lack of debt modification or conversions
in the quarter.  Nine
months ended September 30, 2008 and 2007 (all amounts for these periods are
unaudited)  Revenues.    Our revenues decreased
$45,598 or 28%, to $119,657 for the nine months ended September 30, 2008, as
compared to $165,255 for the nine months ended September 30, 2007.
 The decrease in revenues was due primarily to the lack of orders by our
largest customer.  Gross profit.    Cost of sales consists
primarily of raw material and component costs, manufacturing and supervisory
labor, manufacturing overhead costs and royalties.  The gross profit for the nine months ended September 30, 2008
was $95,291, an increase of $153,528 or 260% as compared to a gross loss of
$58,237 for the nine months ended September 30, 2007.  The gross
profit for the nine months ended September 30, 2008 represented 80% of revenue
for that same period as compared to the gross loss for the nine months ended
September 30, 2007 which represented negative gross margin of 35% of revenue for
that same period.  The Companys significant negative gross margin during
the first nine months of 2007 was due to the lack of capitalization of normal
fixed manufacturing costs.  Operating expenses.    Operating
expenses consist of selling and marketing expenses, which are primarily
salaries, commissions and promotional expenses, and general and administrative
expenses, which are primarily salaries and bonuses, rent expense, depreciation
and professional services such as legal and accounting fees.  Operating expenses decreased by $432,779 or 48% to $463,296 for
the nine months ended September 30, 2008 versus $896,075 for the nine months
ended September 30, 2007.  The decrease in operating expenses was
principally due to additional cost cutting measures enacted by the Company
during 2008.  29     Other income (expense).    Other income
(expense) principally consists of interest income and expense, as well as
non-operational revenues or expenses earned or incurred by us.  We had
other expenses of $411,470 during the nine months ended September 30, 2008
versus other expense of $574,899 during the nine months ended September 30,
2007.  The significant charges were due to additional interest expense,
related to a beneficial conversion feature, recognized from the issuance of
convertible notes payable during the nine months ended September 30, 2007, and
from the modification of the conversion rates for outstanding debt during the
quarter ended September 30, 2008.  Warrant  As of
the date of this report, in addition to the outstanding warrants related to the
convertible notes, we have an outstanding warrant to purchase a total of 488,170
shares of common stock, at a weighted average exercise price of $0.139 per
share.  New Era issued this warrant, which is to expire on January 26,
2011, to our former chief financial officer, Gary Freeman on June 12, 2006.
 This warrant contains anti-dilution provisions providing for adjustments
of the exercise price and the number of shares of common stock underlying the
warrant, registration rights and piggy-back registration rights.  In
addition, under the warrant we may cancel Mr. Freemans right to exercise up to
50% of the shares of our common stock in the event that he or Bandari Beach Lim
& Cleland LLP, of which Mr. Freeman is a partner, cancels a letter of
understanding between Bandari and New Era for reasons not involving nonpayment
of fees to Bandari, material adverse alteration of Mr. Freemans duties as chief
financial officer, breach, fraud or other designated reasons.  Our right to
cancel up to 50% of Mr. Freemans exercise rights underlying the warrant
decreased ratably each month beginning July 1, 2006 and ending June 30, 2007,
accordingly we no longer have the ability to cancel any percentage of Mr.
Freemans exercise rights.  Inflation and Seasonality  Inflation has not been material to us during the past five years.
Although seasonality has not historically been material, we believe that as our
business expands, seasonality will begin to affect our quarterly results of
operations.  Critical Accounting Policies  The
preparation of financial statements and related disclosures in conformity with
accounting principles generally accepted in the United States of America
requires us to make judgments, assumptions and estimates that affect the amounts
reported. Note 1 of the Notes to Consolidated Financial Statements
describes the significant accounting policies used in the preparation of the
consolidated financial statements. Certain of these significant accounting
policies are considered to be critical accounting policies, as defined below. On
a regular basis, we review the accounting policies we use in reporting our
financial results. A
critical accounting policy is one that is both material to the presentation of
our combined financial statements and requires us to make difficult, subjective
or complex judgments that could have a material effect on our financial
condition and results of operations. Specifically, critical accounting estimates
have the following attributes:  · we
have to make assumptions about matters that are highly uncertain at the time of
the estimate; and · different
estimates we could reasonably have used, or changes in the estimate that are
reasonably likely to occur, would have a material effect on the our financial
condition or results of operations.  We cannot make estimates and assumptions about future events or
determine their effects with certainty. We base our estimates on historical
experience and on various other assumptions that we believe to be applicable and
reasonable under the circumstances. These estimates may change as new events
occur, as we obtain  30    additional information and as our operating environment changes.
These changes have historically been minor and we have included them in the
combined financial statements as soon as they became known.  In addition,
we periodically face uncertainties, the outcomes of which are not within our
control and we will not know for prolonged periods of time.  Based on a
critical assessment of our accounting policies and the underlying judgments and
uncertainties affecting the application of those policies, we believe that our
combined financial statements are fairly stated in accordance with accounting
principles generally accepted in the United States of America, and present a
meaningful presentation of our financial condition and results of operations. We
believe that the following are our critical accounting policies:  Revenue
Recognition  We
recognize revenue from gross product sales, including freight charges, and
revenues from the license of products, in compliance with Staff Accounting
Bulletin No. 101 and No. 104 which require that:  · title
and risk of loss have passed to the customer; · there
is persuasive evidence of an arrangement; · delivery
has occurred or services have been rendered; · the
sales price is fixed and determinable; · collectibility
is reasonably assured; and · customer
acceptance criteria, if any, have been successfully demonstrated.  Accounts
Receivable  We extend credit to our customers.  We generally do not
require collateral.  We provide for credit losses in the consolidated
financial statements based on our evaluation of historical and current industry
trends. Although we expect to fully collect amounts due, actual collections may
differ from estimated amounts.  Inventories  We state inventories at the lower of cost or market.  We
determine cost on a standard cost basis which approximates the first-in,
first-out (FIFO) method.  We give appropriate consideration to
obsolescence, excessive levels, deterioration and other factors in evaluating
net realizable value.  ITEM 3.
 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Not applicable.   31    ITEM
4T.  CONTROLS AND PROCEDURES  Disclosure
Controls and Procedures  We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our filings under the Exchange Act is
recorded, processed, summarized and reported within the periods specified in the
rules and forms of the Securities and Exchange Commission (SEC).  This
information is accumulated and communicated to our executive officers to allow
timely decisions regarding required disclosure.  Our Chief Executive
Officer and Chief Financial Officer evaluated the effectiveness of our
disclosure controls and procedures as of the end of the period covered by this
report and concluded that our disclosure controls and procedures were effective.  Managements
Annual Report on Internal Control over Financial Reporting  Our
Chief Executive Officer and Chief Financial Officer are responsible to design or
supervise a process to be effected by our board of directors that provides
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles.  The policies and procedures
include: maintenance of records in reasonable detail to accurately and
fairly reflect the transactions and dispositions of assets,provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
 generally accepted accounting principles, and that receipts and
expenditures are being made only in accordance with authorizations of
management and directors, andprovide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of assets that could
have a material effect on our financial statements. Our
management determined that there were no changes made in our internal controls
over financial reporting during the second quarter of 2008 that have materially
affected, or are reasonably likely to materially affect our internal control
over financial reporting.  We do
not expect that our disclosure controls and procedures and internal control over
financial reporting will prevent all error and all fraud. A control system, no
matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that we have detected all control issues and
instances of fraud, if any.  The design of any system of controls also is
based in part upon assurance that any design will succeed in achieving its
stated goals under all potential future conditions. However, controls may become
inadequate because of changes in conditions or the degree of compliance with the
policies or procedures may deteriorate. Because of the inherent limitations in a
cost-effective control system, we may not detect misstatements due to error or
fraud.  32    PART II  OTHER INFORMATION   ITEM 1. LEGAL
PROCEEDINGS **** We know of no material,
active or pending legal proceedings which we are a party to, or which our
property is subject to.  ITEM 1A.
 RISK FACTORS  The
business, financial condition and operating results of Silvergraph could be
adversely affected by any of the following factors, in which event the value of
the equity securities of Silvergraph International could decline, and investors
could lose part or all of their investment. The risks and uncertainties
described below are not the only ones that we face. Additional risks and
uncertainties not presently known to management, or that management currently
thinks are immaterial, may also impair future business operations.  For
purposes of the discussion of the following risk factors, references to we and
our  shall include, unless otherwise indicated, Silvergraph
International, Inc. as well as New Era Studios, Inc. (as statutory successor in
interest to Silvergraph LGT, LLC) as it existed prior to the share exchange.  We have a history
of losses and nominal operating results.  Silvergraph, formerly known as Pinecrest Services, Inc., commenced
operations as a shell in 1986, but has had no significant business prior to the
share exchange.  New Era has, since inception through September 30, 2008,
incurred an accumulated deficit of $5,022,057.  We can offer no assurance
that we will operate profitably or that we will generate positive cash flow in
the future.  In addition, our operating results in the future may be
subject to significant fluctuations due to many factors not within our control,
such as the level of competition and general economic conditions.  Our
operations will be subject to all the risks inherent in the establishment of a
developing enterprise and the uncertainties arising from the absence of a
significant operating history.  We can give no assurance that we will be
able to operate on a profitable basis which may lead to the entire loss of an
investment in our common stock.  Due to
the nature of our business and the early stage of our development, an investment
in our securities is highly speculative. We are in the business of developing
and distributing wall art.  The success of our business will depend on our
ability to introduce and sell our wall art products to consumers, develop new
product extensions and applications, and raise additional capital for
operations, future expanded marketing and further product development. We have
focused much of our business on developing and refining our patent-pending
technology.  We are currently prosecuting a patent application to protect
our proprietary intellectual property, which to date we have not received patent
approval.  We have not realized a profit from our operations and there is
little likelihood that we will realize any profits in the short or medium term.
 In addition, our independent registered public accountants have raised
substantial doubts in connection with their opinion related to our audited
financial statements as to our ability to continue as a going concern.  We
expect to continue to incur development and operating costs.  Consequently,
we expect to incur operating losses and negative cash flows until our wall art
products gain market acceptance, if ever, sufficient to generate a sustainable
level of income.  .   33    **We have had negative cash flows from operations since
inception. We will require significant additional financing, the availability of
which cannot be assured, and if we are unable to obtain such financing, our
business may fail**  To date, we have had negative cash flows from operations and have
depended on sales of our equity securities and debt financing to meet our cash
requirements. Our ability to develop and, if warranted, commercialize our
technologies, will be dependent upon our ability to raise significant additional
financing. If we are unable to obtain such financing, we will not be able to
fully develop our business. In addition, our independent registered public
accountants have raised substantial doubts in connection with their opinion
related to our audited financial statements as to our ability to continue as a
going concern. Specifically, in order to continue as a going concern we will
need to raise additional funds to:  support
our planned growth and carry out our business plan;address
competing technological and market developments; andmarket
and develop our wall art products. We may
not be able to obtain additional equity or debt financing on acceptable terms as
required. Even if financing is available, it may not be available on terms that
are favorable to us or in sufficient amounts to satisfy our requirements. If we
require, but are unable to obtain, additional financing in the future, we may be
unable to implement our business plan and our growth strategies, respond to
changing business or economic conditions, withstand adverse operating results
and compete effectively. More importantly, if we are unable to raise further
financing when required, we may be forced to scale down our operations and our
ability to generate revenues may be negatively affected.  If we are unable
to develop market share and generate significant revenues from the
commercialization or licensing of our technology, then our business may
fail.  Our
failure to compete effectively and generate income through the commercialization
of our products may adversely affect our ability to generate revenue.  We
are introducing our wall art products essentially as new products to an untested
consumer market.  We do not know whether our products will generate
widespread acceptance. If consumers do not purchase our products, we will not be
profitable subjecting our investors to a loss of their investment.  Our
competitors may develop or utilize similar technologies, which will enable them
to compete directly against us.  Many of our competitors have greater
financial, technical, sales and marketing resources, better name recognition and
a larger customer base than ours.  Some of our competitors may conduct more
extensive promotional activities and offer lower commercialization costs to
customers than we do, which could allow them to gain greater market share or
prevent us from establishing and increasing our market share.  Increased
competition in the wall art industry may result in significant price
competition, reduced profit margins or loss of market share, any of which may
have a material adverse effect on our ability to generate revenues and
successfully operate our business.  In the future, we may need to decrease
our prices if our competitors lower their prices.  Our competitors may be
able to respond more quickly to new or changing opportunities, technologies and
customer requirements.  Such competition will potentially affect our
chances of achieving profitability.  Our inability to
complete our product development activities successfully may severely limit our
ability to operate and finance operations.  Commercialization of our wall art products will require additional
research and development.  We believe that the United States, Canada and
Mexico will be our principal markets for our products, although we may elect to
expand into Western Europe and elsewhere.  We may not be able to
successfully market our products.  We, and any of our potential
collaborators, may encounter problems and delays relating to research and
development, regulatory approval and intellectual property rights of our
technology.  Whether or not any of these events occur, we may not have
adequate resources to continue operations for the period required to resolve the
issues delaying commercialization and we may not be able to raise capital to
finance our continued operation during the period required for resolution of
that issue.   34    We
hold no patents on our proprietary technology and if we are not able to protect
our proprietary technology, we may lose our competitiveness and suffer a
material adverse effect.  We
currently have one patent application for our technologies. We rely on this
patent application and trade secrets to protect our proprietary intellectual
property.  While we believe that we have adequately protected our
proprietary technology, and we intend to take all appropriate and reasonable
legal measures to protect it in the future, the use of our technology by a
competitor could have a material adverse effect on our business, financial
condition and results of operations. Furthermore, regulatory authorities may not
grant us patents on our provisional or future patent applications.  Also,
the scope of any future patent may not be sufficiently broad to offer meaningful
protection.  In addition, third parties may successfully challenge,
invalidate or circumvent patents granted to us so that such patent rights may
not create an effective competitive barrier.  Further, the laws of foreign
countries may provide inadequate protection of such intellectual property
rights.  Our
ability to compete successfully and achieve future revenue growth will depend,
in part, on our ability to protect our proprietary technology and operate
without infringing upon the rights of others. We may not be able to successfully
protect our proprietary technology, and our proprietary technology may otherwise
become known or our competitors may independently develop similar technology.
Competitors may discover novel uses, develop similar or more marketable
technologies or offer services similar to our services at lower prices. We
cannot predict whether our technologies and services will compete successfully
with the technologies and services of existing or emerging competitors.  We may become
subject to intellectual property litigation which may be time-consuming and
costly.  Our
success depends in part on our ability to develop commercially viable products
without infringing the proprietary rights of others.  Although we have not
been subject to any filed infringement claims, other patents could exist or
could be filed which may prohibit or limit our ability to market our products or
maintain a competitive position.  In addition, we may need to bring legal
claims to enforce or protect our own intellectual property rights.  In the
event of an intellectual property dispute, we may have to litigate.
 Regardless of whether we are successful, intellectual property litigation,
including claims against us lacking merit, may be time-consuming, costly and may
divert our attention from developing and marketing our products.  An
adverse outcome could subject us to significant liabilities to third parties,
result in the loss of goodwill associated with our business or force us to
alter, curtail or cease the development and commercialization of our products
and technology.  Our current or
future manufacturers could fail to fulfill our orders for certain materials
which would disrupt our business, increase our costs and could potentially cause
us to lose our market.  Because
our inks are proprietary, we will initially depend on one manufacturer in
California to produce and supply our inks.  In addition, we also will
initially depend on one manufacturer in New Hampshire to produce and supply our
canvases.  There is a potential that these two manufacturers will not be
able to produce our inks and canvasses in a timely manner or in sufficient
volumes.  These manufacturers may also fail to produce the inks and
canvasses to our specifications or in a workmanlike manner and may not deliver
them on a timely basis.  We are in the process of identifying other
manufacturers to assure us of alternative sources of supply.  Any change in
manufacturers could disrupt our business due to delays in finding a new
manufacturer, providing specifications and testing initial production.   35    Our
board has not made a determination of fairness regarding related-party
transactions.  In
prior years we entered into transactions with our president, director and 22.5%
shareholder, William W. Lee, and other entities that he controls.  Our
board has not made a determination as to whether these related-party
transactions were made on terms no less favorable than terms we could have
obtained from unaffiliated third parties.  Our board has adopted a policy
that any future transactions between us and our officers, directors or principal
stockholders will require the approval of a majority of the disinterested
directors and will be on terms no less favorable than we could obtain from an
unaffiliated third party.  The loss of our
customer, Home Interior & Gifts, could result in reduced revenues for us
that we may not be able to replace.  Currently, we are highly dependent on one customer, Home Interiors
& Gifts, located in Carrollton, Texas.  This customer represented 70%
of our revenue in 2006 and 47% in 2007.  We do not have a long-term
contract with the client, and as such, the client could terminate the
relationship at any time.  In the event that we lose this customer, we may
be unable to replace in whole or in part the lost revenue generated from that
customer and necessarily the net income received therefrom.   To date,
we have not consummated a contract with any new customers who generate
significant revenue and income for us, but we intend to diversify the sources of
our revenue through the release of our exclusive collection of images to the
public as soon as practicable.  Our marketing
strategies may not be successful which would adversely affect our future
revenues and profitability.  Our
revenues and future depend on the successful marketing of our wall art products.
 We cannot assure you that consumers will have an interest in our products.
We initially plan to use direct marketing to sell our products via television
commercials, magazine and newspaper advertising and the Internet.  Our
commercials may not generate sufficient revenue to continue to air them.
 If our marketing strategies fail to attract customers, our product sales
will not produce future revenues sufficient to meet our operating expenses or
fund our future operations resulting in the potential failure of our
business.  If we fail to
effectively manage growth and the commercialization of our wall art products, we
may harm our future business results and we may strain our managerial and
operational resources.  As we
proceed with the development of our technology and the expansion of our
marketing and commercialization efforts, we expect to experience significant
growth in the scope and complexity of our business.  We will need to add
staff to market our products and services, manage operations, handle sales and
marketing efforts and perform finance and accounting functions.  We
anticipate that we will need to hire additional personnel in order to
successfully advance our operations.  This growth is likely to place a
strain on our management and operational resources.  The failure to develop
and implement effective systems, or to hire and retain sufficient personnel for
the performance of the functions necessary to effectively service and manage our
potential business, or the failure to manage growth effectively, could have a
material adverse effect on our business and financial condition.  Our failure to
retain key personnel may result in our inability to manage and implement our
business plan.  The
departure of any of our management or any significant technical personnel or
consultants we hire in the future, the breach of their confidentiality and
non-disclosure obligations, or the failure to achieve our intellectual property
objectives may have a material adverse effect on our business, financial
condition and results of operations. We believe our success depends upon the
knowledge and experience of our management and our ability to market our
existing wall art products and to develop new technologies to improve our
products.  36    We are highly dependent upon our management personnel such as
James R. Simpson and William W. Lee because of their experience developing and
marketing wall art products.  The loss of the services of one or more of
these individuals may impair our ability to operate. We have not purchased key
man insurance on any of these individuals, which insurance would provide us with
insurance proceeds in the event of their death.  Without key man insurance,
we may not have the financial resources to develop or maintain our business
until we could replace the individual or to replace any business lost by the
death of that person.  Failure to achieve
and maintain effective internal controls in accordance with Section 404 of the
Sarbanes-Oxley Act could lead to loss of investor confidence in our reported
financial information.  Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we are
required to furnish a report by our management in connection with the filing of
periodic reports, on our internal control over financial reporting.  If we
cannot provide reliable financial reports or prevent fraud, then our business
and operating results could be harmed, investors could lose confidence in our
reported financial information, and the trading price of our stock could drop
significantly.  In order to achieve compliance with Section 404 of the Act
within the prescribed period, we have engaged in a process to document and
evaluate our internal control over financial reporting, which has been
challenging.  We cannot assure you as to our independent auditors
conclusions as of the year ending December 31, 2008 with respect to the
effectiveness of our internal control over financial reporting.  There is a
risk that our independent auditors will not be able to conclude at December 31,
2008 that our internal controls over financial reporting are effective as
required by Section 404 of the Act.  If we
fail to achieve and maintain the adequacy of our internal controls, as such
standards are modified, supplemented or amended from time to time, we may not be
able to ensure that we can conclude on an ongoing basis that we have effective
internal controls over financial reporting in accordance with Section 404 of the
Sarbanes-Oxley Act.  Moreover, effective internal controls, particularly
those related to revenue recognition, are necessary for us to produce reliable
financial reports and are important to helping prevent financial fraud.  Investors in our
common stock may suffer future dilution from warrant exercises.  Future
dilution to our shareholders may occur from warrant exercises. To date, we have
granted warrants to purchase 488,170 shares of our common stock to our principal
financial officer and granted warrants to purchase 143,000 shares of our common
stock to investors in the convertible note offering.  If we issue
additional shares in the future, it will result in dilution for our existing
shareholders.  Our
articles of incorporation authorize the issuance of up to 100,000,000 shares of
common stock.  Our board of directors may choose to issue some or all of
such shares to acquire one or more businesses or to provide additional financing
in the future.  The issuance of any such shares will result in a reduction
of the book value and market price of the outstanding shares of our common
stock.  If we issue any such additional shares, such issuance will cause a
reduction in the proportionate ownership and voting power of all current
shareholders.  A majority of the
shareholders have previously voted to authorize our board of directors, in its
discretion, to affect a reverse split of our common stock in the range of 30 to
66 shares for each one share while maintaining our authorized shares at
100,000,000.  A
majority of the shareholders have previously voted to authorize our board of
directors, in its discretion, to affect a reverse split of our common stock in
the range of 30 to 66 shares for each one share while maintaining our authorized
shares at 100,000,000.   This action was not taken by the Company, but
may be taken pursuant to a shareholder consent at some point in the future.
 If our board of directors implements a reverse stock split it will affect
all issued shares of our common stock and outstanding rights to acquire our
common stock while our authorized shares will remain the same at 100,000,000.
 We cannot assure that the market price per share of our  37    common stock after the reverse stock split will remain unchanged
or increase in proportion to the reduction in the number of shares of our common
stock issued before the reverse stock split.  Accordingly, our total market
capitalization after the reverse stock split may be lower than the total market
capitalization before the reverse stock split.  The market price of our
common stock may decline after we affect the reverse stock split.  The
percentage decline may be greater than would occur in the absence of a reverse
stock split.  Furthermore, the liquidity of our common stock could be
adversely affected by the reduced number of shares that would be outstanding
after the reverse stock split. Additionally, we cannot assure that the reverse stock split will
result in a per share price that will attract institutional investors or
investment funds or that such share price will satisfy the investing guidelines
of institutional investors or investment funds. As a result, the trading
liquidity of our common stock may not necessarily improve.  The SEC's penny
stock regulations may restrict trading of our stock, which may limit a
stockholder's ability to buy and sell our stock.  The SEC
has adopted regulations which generally define "penny stock" to be any equity
security that has a market price (as defined) less than $5.00 per share or an
exercise price of less than $5.00 per share, subject to certain exceptions.
 The penny stock rules, which initially govern our securities, impose
additional sales practice requirements on broker-dealers who sell to persons
other than established customers and "accredited investors".  The term
"accredited investor" refers generally to institutions with assets in excess of
$5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
incomes for the last two years and anticipated incomes for this year exceeding
$200,000 or $300,000 jointly with their spouse.  The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock not otherwise
exempt from the rules, to deliver a standardized risk disclosure document in a
form prepared by the SEC, which provides information about penny stocks and the
nature and level of risks in the penny stock market.  The broker-dealer
also must provide the customer with current bid and offer quotations for the
penny stock, the compensation of the broker-dealer and its salesperson in the
transaction and monthly account statements showing the market value of each
penny stock held in the customer's account.  A broker-dealer must provide
to a customer orally or in writing the bid and offer quotations, and the
broker-dealer and salesperson compensation information prior to effecting the
transaction.  In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from these rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction.  These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary market for the
stock that is subject to these penny stock rules. Consequently, these penny
stock rules may affect the ability of broker-dealers to trade our securities. We
believe that the penny stock rules discourage investor interest in and limit the
marketability of our common stock.  NASD sales
practice requirements may also limit a stockholder's ability to buy and sell our
stock.  In
addition to the penny stock rules, the National Association of Securities
Dealers has adopted rules that require that in recommending an investment to a
customer, a broker-dealer must have reasonable grounds for believing that the
investment is suitable for that customer.  Prior to recommending
speculative low priced securities to their non-institutional customers,
broker-dealers must make reasonable efforts to obtain information about the
customer's financial status, tax status, investment objectives and other
information.  Under interpretations of these rules, the NASD believes that
there is a high probability that speculative low priced securities will not be
suitable for at least some customers.  The NASD requirements make it more
difficult for broker-dealers to recommend that their customers buy our common
stock, which may limit an investors ability to buy and sell our stock and may
have an adverse effect on the market for our shares.   38    Our
common stock is illiquid and factors unrelated to our operations may negatively
impact the price of our common stock.  Our
common stock currently trades on a limited basis on the OTC Bulletin Board.
 Trading of our stock through the OTC Bulletin Board is frequently thin and
highly volatile. There can be no assurances that a sufficient market will
develop in the stock, in which case it could be difficult for shareholders to
sell their stock.  The market price of our common stock could fluctuate
substantially due to a variety of factors, including market perception of our
ability to achieve our planned growth, quarterly operating results of our
competitors, trading volume in our common stock, changes in general conditions
in the economy and the financial markets or other developments affecting our
competitors or us.  In addition, the stock market is subject to extreme
price and volume fluctuations.  This volatility has had a significant
effect on the market price of securities issued by many companies for reasons
unrelated to their operating performance and could have the same effect on our
common stock.  ITEM 2.
 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS  None.  ITEM 3.
 DEFAULTS UPON SENIOR SECURITIES  None.  ITEM 4.
 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS  The
board of directors has determined that it will take no formal action pertaining
to a majority consent of its shareholders dated May 8, 2008, disclosed in the
Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 2008,
under Item 4. Submission of Matters to a Vote of Security Holders.  On
May 8, 2008, pursuant to Nevada Revised Statutes §78.320, a majority of the
outstanding shares of common stock of the Company approved a reverse stock split
of the Companys issued and outstanding shares.   Shareholders
representing 32,300,715 shares, or 52.6% of the Companys 61,450,976 shares
outstanding, approved the action by written consent.   The reverse
stock split ratio was to be determined by the board of directors in its
discretion as necessary to satisfy the Companys potential obligation to have a
total of 1,500,000 common shares issued and outstanding upon closing of an
anticipated acquisition and/or merger; however, the ratio shall be in the range
of 30 to 66 shares for each one share.  The Company has not filed a
Schedule 14C Information Statement pertaining to this action, and has
subsequently concluded that the reverse split will be the subject of a future
shareholder action.  ITEM 5. OTHER
INFORMATION  None.  ITEM 6.
 EXHIBITS  Part I
Exhibits No. Description 31.1 Chief
Executive Officer Certification 31.2 Principal
Financial Officer Certification 32.1 Section
1350 Certification   39    Part
II Exhibits No. Description 3.1(i) Articles
of Incorporation (Incorporated by reference to exhibit 3.1(i) to Form 10-SB
filed on July 6, 2000) 3.1(ii) Amendment
to Articles of Incorporation (Incorporated by reference to exhibit 3.1(ii) to
Form 8-K filed on June 23, 2006) 3.2 Bylaws
(Incorporated by reference to exhibit 3.2 to Form 10-SB filed on July 6,
2000) 10.1
       Form of Conversion Agreement, dated
January 18, 2008 (Incorporated by reference to exhibit 10.1 to Form 10-K filed
April 15, 2008) 10.2 Subscription
Agreement between Silvergraph and Subscribers, dated January 25, 2008
(Incorporated by reference to exhibit 10.1 to Form 8-K filed February 7,
2008) 10.3 Form
of Convertible Promissory Notes between Silvergraph and Holders, dated February
1, 2008 (Incorporated by reference to exhibit 10.3 to Form 10-K filed April 15,
2008) 10.4 Consulting
Agreement between Silvergraph and Mirador Consulting, Inc., effective February
6, 2008 (Incorporated by reference to exhibit 10.4 to Form 10-K filed April 15,
2008) 10.5 1st
Amendment to the 7% Notes Due May 31, 2008 between Silvergraph and Holders,
dated April 4, 2008 (Incorporated by reference to exhibit 10.5 to Form 10-K
filed April 15, 2008) 10.6 2nd
Amendment to the 7% Notes Due June 30, 2008 between Silvergraph and Holders,
dated June 30, 2008 (Incorporated by reference to exhibit 10.1 to Form 8-K filed
July 7, 2008) 10.7 Termination
Agreement between Silvergraph, New Era and Executives, dated April 11, 2008
(Incorporated by reference to exhibit 10.6 to Form 10-K filed April 15,
2008) 10.8 3rd
Amendment to the 7% Notes Due August 31, 2008 between Silvergraph and Holders,
dated August 31, 2008 (Incorporated by reference to exhibit 10.1 to Form 8-K/A
filed September 4, 2008) 10.9 Amendment
to Loan Transaction Agreement between Silvergraph and Holders, effective October
31, 2008 (Incorporated by reference to exhibit 10.1 to Form 8-K filed November
17, 2008)     40    SIGNATURES  Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.  SILVERGRAPH
INTERNATIONAL, INC.



By:
/s/
James R. Simpson
James R. Simpson, Chief Executive Officer
Secretary and Director
Date: November
19, 2008By:
/s/
William W. Lee
William W. Lee
President and Director
Date: November
19, 2008   41